If Interest Rates Are Currently Very High and You Expect

question 46

Multiple Choice

If interest rates are currently very high and you expect them to go down soon, you will most likely

• A) sell your bonds now, while their yield is high and they are more marketable
• B) want to hold more money now to undertake more transactions since you expect economic activity to increase
• C) hold more money now, so you can buy more bonds later as soon as interest rates have dropped
• D) hold on to your bonds for now but expect to sell some of them later once interest rates have declined
• E) switch from holding long-term bonds to holding short-term bonds

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Definitions:

Developmental Psychologist

A psychologist who specializes in understanding the changes that people undergo throughout their lifespan, including physical, cognitive, social, intellectual, perceptual, personality, and emotional growth.

Behaviour

The actions or reactions of an organism, often in relation to its environment, which can be observed and measured.

Life Span

The maximum duration of life, or the length of time an individual or entity exists from birth to death.

Specialization

A process or strategy of focusing on a narrow area of knowledge or skill, often to achieve higher levels of expertise in that area.